A health setback for Hunter Harrison punishes CSX stock

A CSX coal train moves past an idling CSX engine at the switchyard in Brunswick Maryland

A CSX coal train moves past an idling CSX engine at the switchyard in Brunswick Maryland

CSX Corp's CSX.O shares tumbled on Friday in premarket trading after the No. 3 USA railroad said Chief Executive Hunter Harrison was taking medical leave for unexpected complications from a recent unspecified illness.

The train-line operator has named Chief Operating Officer James Foot as acting replacement. The board was revamped earlier this year after activist investor Mantle Ridge led a successful campaign to replace five of CSX's directors and install Mr. Harrison as the company's CEO. Foote joined CSX in late October and assumed the responsibilities of former COO Cindy Sanborn and Chief Sales and Marketing Officer Fredrik Eliasson, who both resigned.

Harrison, who is in his early 70s, was hired by CSX in March after several years leading Canada's two biggest railways-Montreal-based Canadian National and Calgary-based Canadian Pacific. "The illness 'led to medical complications", Mr. Foote said. It replicates the scheduled railroading transformation they effected at CN a number of years ago, he said. "Because the team has implemented a foundation consistent with Hunter's vision, I do not see any reason to diminish our expectations concerning the pace and magnitude of our future progress".

"We expect that the announcement of his leave pressures the stock", he wrote.

No CSX board members participated in Friday's conference call.

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